Kathmandu. As the return on investment (ROE) given by the banking sector to the founder investors is decreasing, the exit of old founder investors from the banking sector is increasing rapidly. Insurance companies have been increasing their investment due to the exit of old founder investors from the banking sector.

Over the last few years, the bank’s ROE has come down to single digits, leaving the old founding shareholders disappointed. Till the fourth quarter of the last fiscal year, the bank’s ROE average was only 9.96 percent. In the previous financial year, the ROE of banks was even lower. Although the ROE has increased slightly compared to the previous fiscal year, it is still in single digits.

According to the Insurance Authority, the investment made by insurance companies in the founding shares of the banking sector in the banking sector has increased by 37.84 percent in the last fiscal year. In terms of percentage, non-life insurance companies have bought the highest number of founder shares in the banking sector in the last fiscal year. According to the NRA, the non-life insurance company has increased its investment in the bank’s founder shares by 83.98 percent in one year. According to nea, life insurance companies have increased their investment in the bank’s founder shares by 32.24 percent in the last one year.

In the fourth quarter of the last fiscal year, life insurance companies invested Rs 180.63 billion in the founder shares of the banking sector, while the non-life insurance companies invested Rs 26.88 billion in such shares. Asian Life Insurance Company is the life insurance company that bought the highest number of founder shares of commercial banks till mid-June of the last fiscal year. The company has bought the bank’s founder shares worth Rs 37.94 billion.

Similarly, the second life insurance company with the highest number of founder shares of the bank is the National Life Insurance Company. According to the Insurance Authority, the company has purchased the founder shares of the bank worth Rs 24.50 billion.

Similarly, Nepal Life Insurance Company has bought the founder shares of the bank worth Rs 31.71 billion and National Life Insurance Company has purchased the founder shares of the bank worth Rs 16.51 billion.

Similarly, Sagarmatha Lumbini Insurance Company is the non-life insurance company that bought the highest number of founding shares of the bank till mid-June of the last fiscal year. The company has bought the founder shares of the bank worth Rs 12.20 billion. Similarly, Himalayan Shikhar Insurance Company and Everest Insurance Company bought shares worth Rs 3.14 billion and Rs 2.12 billion, respectively.

Similarly, IGI Prudential Insurance, NLG Insurance, Oriental Insurance Company and Nepal Insurance Company are among the non-life insurance companies that have purchased more than Rs 1 billion worth of shares. Four non-life insurance companies have not purchased founder shares of any bank till this period.

Of late, insurance companies have been increasing investment in the founder shares of commercial banks and financial institutions. Since the insurance business itself is based on long-term liabilities and stability, it chooses areas that provide safe and stable income. Insurance companies have prioritized the form of founder shares as they are stable and regular dividend-oriented.

According to the investment policy set by the Insurance Authority, insurance companies have to divide their funds into different sectors. Due to which the insurance company has shown interest in buying the founder shares of the bank. The bancassurance system has been expanding in recent years. Under this, the practice of selling insurance through banks is increasing. In such a situation, buying the founder shares of the bank will be strategically good for the insurance company.